H-P and proxy politics.

H-P and proxy politics.

H-P and Proxy Politics

There were no reports of a phone conversation between Carly Fiorina and Walter Hewlett Tuesday, so we have no way of knowing whether Hewlett-Packard's CEO got snippy about the refusal of her most famous board member to concede defeat in the big shareholder vote on the company's proposed merger with Compaq. Otherwise, though, the conclusion of the months-long proxy squabble lived up to comparisons to a political contest—not least in echoing the rancor that surrounded the protracted finale of the most recent presidential election.

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Opponents of the deal played the role of populists, fighting to stave off a threat to "the H-P way." Hewlett, their ringleader, was treated "like a rock star," as CNBC's correspondent on the scene put it, when he arrived at the Flint Center in Cupertino, Calif., for the shareholder meeting. Outside, his grass-roots supporters gathered under provocative signs and placards, or theatrically sheathed themselves in green, the color of the "no" proxy cards. (The "yes" cards were white.) All they needed were some of those big puppets that anti-globalization demonstrators always seem to have. Inside, some of them booed Fiorina.

The CEO, however, was an extremely active campaigner herself. Maybe she didn't have all the support she wanted from the masses, but she is reported to have logged 99,000 miles flying around the country to make her case to institutional shareholders who control big blocks of stock (that is, votes). Although she says her side has eked out a narrow victory, Hewlett prefers to wait until every vote is counted, which for some reason is going to take up to seven weeks. That's not a great situation for two companies that have already been in merger limbo for so long.

Even murkier than the final tally is whether the emergence of such thorough "democratization" led to a shareholder vote that was more informed than usual or just more hotly contested. This was like a political campaign, all right—a battle driven by slogans, mudslinging, and personalities. The competing sides released contradictory polls on how H-P employees viewed the deals. Some reports indicate that, in an echo of that whole red-or-blue America thing, the two voting blocs were just, deep down, different: The "green," anti-merger forces seemed to do better among individual shareholders, while the "white" pro-merger side prevailed with institutions. And since it's actually impossible to know for sure how a merger would play out, the contest gradually got boiled down to one between sentimentality and optimism.

The circumstances around this particular merger vote have been so unusual that they're unlikely to be repeated. But perhaps it's attracted enough attention that, whatever the final outcome, it will convince all sorts of shareholders that their proxy votes can matter. That's the positive spin. The negative spin is that we've now seen just how much a shareholder vote can resemble a political one—and it sure isn't pretty.